The Nation: The High Price of Higher Milk Prices

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President Nixon repeatedly has denied any connection between his decision to raise federal milk price supports in 1971 and three large dairy cooperatives' financial support of his 1972 reelection campaign. He has insisted that the real reason for the increase was to forestall the Democratic Congress from legislating an even larger boost. But evidence to the contrary continues to accumulate Last week Democratic staffers of the Senate Watergate committee completed a 359-page draft report that was damaging to the President. The investigators concluded that both the White House and the milkmen clearly understood that the cooperatives' pledge of more than $2 million to the Nixon reelection campaign was in return for higher milk prices and other favors.

The committee investigators' best source was Herbert Kalmbach, once Nixon's personal lawyer and a political fund raiser. He told them that the cooperatives, led by Associated Milk Producers, Inc., offered $250,000 in 1969 to the Nixon campaign in hopes of obtaining higher price supports, a speech by Nixon at a forthcoming milk producers' convention and an audience at the White House for milk cooperative leaders. According to the draft, Kalmbach "reported to [then White House Chief of Staff] H.R. Haldeman the pending contribution and the three goals, and Haldeman authorized him to accept the contribution." Haldeman has denied to the committee that he knew anything about that particular contribution. The report said that Kalmbach received $100,000 from the cooperatives but that the rest was withheld "because of the dairy people's dismay at not meeting with more White House officials."

But the milkmen were willing to try again. In 1970 they pledged an additional $2 million, in part to be collected from the two other cooperatives. The promise, according to the report, was first made to Charles Colson, then a White House special counsel, and later directly to President Nixon by Associated Milk Attorney Patrick Hillings. On March 12, 1971, however, then Agriculture Secretary Clifford Hardin decided that no increase hi milk price supports was warranted. To reverse the decision, the cooperatives began an intensive lobbying campaign. On March 22, 1971, they delivered a first payment of $10,000 on their campaign pledge (actual donations were to total about $730,000).

That same morning, said the investigators, Nixon telephoned former Treasury Secretary John Connally, who "did discuss the milk producers and reminded the President of their political contribution 'potential.' " Fifteen minutes later, Nixon met at the White House with dairy cooperative executives and told them that he was "very grateful" for their support. The following day, the President instructed the Agriculture Department to raise support levels. But before the decision was announced, Kalmbach met with milk-cooperative executives to confirm the link between the pledge of $2 million and the price hike.